Asked by Blake Archer on May 29, 2024
Verified
The Jeffries Co.purchased a machine on January 1, 2010.The machine cost $495, 000.It had an estimated life of ten years, or 25, 000 units, and an estimated residual value of $45, 000.In 2010, Jeffries produced 3, 000 units.
Required:
Compute the depreciation charge for 2010 using each of the following methods:
a. Double-declining balance method
b. Activity method (units of output)
c. Sum-of-the-years-digits method
d. Straight-line method
Double-Declining Balance Method
The Double-Declining Balance Method is an accelerated depreciation technique that doubles the rate of straight-line depreciation to allocate a asset's cost more quickly.
Activity Method
A depreciation technique that allocates the cost of an asset over its useful life based on its level of activity, such as units produced or hours used.
Sum-Of-The-Years'-Digits Method
A depreciation technique that accelerates the expense recognition, basing the calculation on a fraction of the sum of the years’ digits of the asset’s life.
- Compute the cost of depreciation employing various approaches, including straight-line, double-declining balance, sum-of-the-years'-digits, and activity method.
Verified Answer
ZK
Zybrea KnightJun 02, 2024
Final Answer :
4. $495,000′2′1/10=599,000\quad \$ 495,000 ' \quad2 ' \quad1 / 10 = 599,000$495,000′2′1/10=599,000
b. [$495,000−$45,000)/25,000]′3,000=$54,000\quad [ \$ 495,000 - \$ 45,000 ) /25,000 ] ' \quad3,000 = \$ 54,000[$495,000−$45,000)/25,000]′3,000=$54,000
c. (495,000−$45,000)′10/55=$81,818( 495,000 - \$ 45,000 ) '\quad10/55 = \$ 81,818(495,000−$45,000)′10/55=$81,818
d. ($495,000−$45,000)/10=$45,000\quad (\$ 495,000 - \$ 45,000 )/10 = \$ 45,000($495,000−$45,000)/10=$45,000
b. [$495,000−$45,000)/25,000]′3,000=$54,000\quad [ \$ 495,000 - \$ 45,000 ) /25,000 ] ' \quad3,000 = \$ 54,000[$495,000−$45,000)/25,000]′3,000=$54,000
c. (495,000−$45,000)′10/55=$81,818( 495,000 - \$ 45,000 ) '\quad10/55 = \$ 81,818(495,000−$45,000)′10/55=$81,818
d. ($495,000−$45,000)/10=$45,000\quad (\$ 495,000 - \$ 45,000 )/10 = \$ 45,000($495,000−$45,000)/10=$45,000
Learning Objectives
- Compute the cost of depreciation employing various approaches, including straight-line, double-declining balance, sum-of-the-years'-digits, and activity method.